10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended November 30, 2002

OR

[  ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For The Transition Period From _________ To ________

Commission File Number 0-16006

COGNOS INCORPORATED
(Exact Name Of Registrant As Specified In Its Charter)

CANADA (State Or Other Jurisdiction Of Incorporation Or Organization)	98-0119485 (IRS Employer Identification No.)
3755 Riverside Drive, P. O. Box 9707, Station T, Ottawa, Ontario, Canada (Address Of Principal Executive Offices)	K1G 4K9 (Zip Code)

(613) 738-1440
(Registrant's Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES     X   NO        

The number of shares outstanding of the registrant's only class of Common Stock as of December 31, 2002, was 87,931,142.

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COGNOS INCORPORATED

INDEX

		PAGE
PART I - FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements
	Consolidated Statements of Income for the three and nine months   ended November 30, 2002 and November 30, 2001	3
	Consolidated Balance Sheets as of November 30, 2002   and February 28, 2002	4
	Consolidated Statements of Cash Flows for the three and nine months   ended November 30, 2002 and November 30, 2001	5
	Condensed Notes to the Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition   and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosure about Market Risk	25
Item 4.	Controls and Procedures	25
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 6.	Exhibits and Reports on Form 8-K	26
Signature		27
Certifications		28

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PART I - FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements

COGNOS INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(US$000s except share amounts, U.S. GAAP)
(Unaudited)

	Three months ended November 30,		Nine months ended November 30,
	2002	2001	2002	2001
Revenue
Product license	$ 62,223	$ 59,114	$167,097	$ 152,835
Product support	52,853	44,578	152,269	129,005
Services	22,998	20,489	67,942	66,670
Total revenue	138,074	124,181	387,308	348,510
Operating expenses
Cost of product license	722	847	2,170	2,915
Cost of product support	5,240	3,825	14,682	11,981
Selling, general, and administrative	85,850	84,943	253,677	259,127
Research and development	18,264	17,579	56,991	55,424
Special charges	-	-	-	12,798
Total operating expenses	110,076	107,194	327,520	342,245
Operating income	27,998	16,987	59,788	6,265
Interest expense	(211)	(88)	(442)	(257)
Interest income	1,521	1,947	4,741	7,167
Income before taxes	29,308	18,846	64,087	13,175
Income tax provision	9,379	5,560	20,508	3,887
Net income	$ 19,929	$   13,286	$ 43,579	$ 9,288
Net income per share
Basic	$0.23	$0.15	$0.50	$0.11
Diluted	$0.22	$0.15	$0.48	$0.10
Weighted average number of shares (000s)
Basic	87,845	87,488	87,916	87,840
Diluted	89,882	89,456	90,487	89,980

(See accompanying notes)

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COGNOS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(US$000s, US GAAP)

	November 30, 2002	February 28, 2002
Assets	(Unaudited)
Current assets
Cash and cash equivalents	$176,542	$192,900
Short-term investments	161,561	121,629
Accounts receivable	102,397	114,059
Inventories	566	537
Prepaid expenses	6,285	6,765
Deferred tax assets	5,759	6,404
	453,110	442,294
Fixed assets	58,586	59,008
Goodwill	15,523	15,230
Intangible assets	3,262	5,620
	$530,481	$522,152
Liabilities
Current liabilities
Accounts payable	$ 22,678	$ 26,387
Accrued charges	25,771	34,210
Salaries, commissions, and related items	39,780	37,453
Income taxes payable	2,936	6,167
Deferred revenue	99,607	110,504
	190,772	214,721
Long-term liabilities	3,440	9,131
Deferred income taxes	6,687	3,127
	200,899	226,979
Stockholders’ Equity
Capital stock
Common shares     (November 30, 2002 – 87,863,382;                                 February 28, 2002 - 87,997,220)	160,373	151,637
Retained earnings	183,962	158,762
Accumulated other comprehensive income	(14,753)	(15,226)
	329,582	295,173
	$530,481	$522,152

(See accompanying notes)

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COGNOS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(US$000s, U.S. GAAP)
(Unaudited)

	Three months ended November 30,		Nine months ended November 30,
	2002	2001	2002	2001
Cash provided by (used in) operating activities
Net income	$ 19,929	$  13,286	$ 43,579	$  9,288
Non-cash items
Depreciation and amortization	5,242	8,053	15,247	22,581
Amortization of deferred stock-based compensation	148	504	518	1,658
Amortization of other deferred compensation	119	606	415	1,938
Deferred income taxes	4,389	(309)	3,659	(2,127)
Loss on disposal of fixed assets	8	43	109	583
	29,835	22,183	63,527	33,921
Change in non-cash working capital
Decrease (increase) in accounts receivable	(18,157)	(6,116)	15,642	44,870
Decrease (increase) in inventory	203	48	(12)	192
Decrease in prepaid expenses	1,484	366	867	1,911
Decrease (increase) in income tax assets	-	2,768	-	(5,526)
Increase (decrease) in accounts payable	4,259	(1,631)	(4,458)	(3,745)
Increase (decrease) in accrued charges	(355)	3,911	(9,755)	9,899
Increase in salaries, commissions, and related items	3,390	3,410	935	5,944
Increase (decrease) in income taxes payable	154	(144)	(3,045)	(16,747)
Decrease in deferred revenue	(5,484)	(2,123)	(14,903)	(10,693)
	15,329	22,672	48,798	60,026
Cash provided by (used in) investing activities
Maturity of short-term investments	19,851	56,557	190,232	235,743
Purchase of short-term investments	(139,146)	(83,144)	(228,789)	(232,035)
Additions to fixed assets	(3,559)	(2,026)	(11,328)	(10,401)
	(122,854)	(28,613)	(49,885)	(6,693)
Cash provided by (used in) financing activities
Issue of common shares	4,106	1,645	9,831	7,073
Repurchase of shares	(6,850)	(9,994)	(19,992)	(19,992)
Increase in long-term debt and long-term liabilities	(2,361)	(806)	(5,464)	(645)
	(5,105)	(9,155)	(15,625)	(13,564)
Effect of exchange rate changes on cash	72	(977)	354	(826)
Net increase (decrease) in cash and cash equivalents	(112,558)	(16,073)	(16,358)	38,943
Cash and cash equivalents, beginning of period	289,100	170,309	192,900	115,293
Cash and cash equivalents, end of period	176,542	154,236	176,542	154,236
Short-term investments, end of period	161,561	113,881	161,561	113,881
Cash, cash equivalents, and short-term investments, end of period	$338,103	$268,117	$338,103	$268,117

(See accompanying notes)

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COGNOS INCORPORATED
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All amounts in United States dollars, unless otherwise stated)
(In accordance with U.S. GAAP)

1. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared by the Corporation in United States (U.S.) dollars and in accordance with generally accepted accounting principles (GAAP) in the U.S. with respect to interim financial statements, applied on a consistent basis. Accordingly, they do not include all of the information and footnotes required for compliance with GAAP in the U.S. for annual financial statements. These unaudited condensed notes to the consolidated financial statements should be read in conjunction with the audited financial statements and notes included in the Corporation’s Annual Report for the fiscal year ended February 28, 2002.

The preparation of these unaudited consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. In the opinion of Management, these unaudited consolidated financial statements reflect all adjustments (which include only normal, recurring adjustments) necessary to state fairly the results for the periods presented. Actual results could differ from these estimates and the operating results for the interim periods presented are not necessarily indicative of the results expected for the full year.

All information is presented in U.S. dollars, unless otherwise stated. Consolidated financial statements prepared in accordance with Canadian GAAP, in U.S. dollars, are made available to all shareholders, and filed with various regulatory authorities.

2. Revenue Recognition

The Corporation recognizes revenue in accordance with Statement of Position (SOP) 97-2, Software Revenue Recognition, issued by the American Institute of Certified Public Accountants.

Substantially all of the Corporation’s product license revenue is earned from licenses of off-the-shelf software requiring no customization. Revenue from these licenses is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectibility is probable. If a license includes the right to return the product for refund or credit, revenue is recognized net of an allowance for estimated returns provided all the requirements of SOP 97-2 have been met.

Revenue from product support contracts is recognized ratably over the life of the contract. Incremental costs directly attributable to the acquisition of product support contracts, and that would not have been incurred but for the acquisition of that contract, are deferred and expensed in the period the related revenue is recognized. These costs include commissions payable on sales of support contracts.

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COGNOS INCORPORATED
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All amounts in United States dollars, unless otherwise stated)
(In accordance with U.S. GAAP)

Revenue from education, consulting, and other services is recognized at the time such services are rendered.

For contracts with multiple obligations (e.g. deliverable and undeliverable products, support obligations, education, consulting, and other services), the Corporation allocates revenue to each element of the contract based on objective evidence, specific to the Corporation, of the fair value of the element.

3. Goodwill

During the three and nine months ended November 30, 2002 there were additions to goodwill of $115,000 and $293,000, respectively, related to additional consideration paid to the former shareholders of Teijin Cognos Incorporated (TCI). This additional consideration was based on the net revenue of TCI during each quarter.

Under SFAS 142 Goodwill and Other Intangible Assets, which the Corporation implemented March 1, 2002, goodwill will no longer be amortized but will be subject to an annual impairment test. The Corporation performed the required impairment tests of goodwill as of March 1, 2002. The effect of these tests was not material on the earnings and financial position of the Corporation.

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COGNOS INCORPORATED
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All amounts in United States dollars, unless otherwise stated)
(In accordance with U.S. GAAP)

If the non-amortization provision of SFAS Nos. 142 had been in effect beginning March 1, 2001 the effect would have been as follows (000’s except per share amounts):

	Three months ended November 30,		Nine months ended November 30,
	2002	2001	2002	2001
Reported net income	$19,929	$13,286	$43,579	$9,288
Goodwill amortization	-	1,089	-	3,267
Adjusted net income	$19,929	$14,375	$43,579	$12,555
Basic net income per share:
Reported net income:	$0.23	$0.15	$0.50	$0.11
Goodwill amortization	-	0.01	-	0.03
Adjusted net income	$0.23	$0.16	$0.50	$0.14
Diluted net income per share:
Reported net income:	$0.22	$0.15	$0.48	$0.10
Goodwill amortization	-	0.01	-	0.04
Adjusted net income	$0.22	$0.16	$0.48	$0.14
Weighted average number of shares:
Basic	87,845	87,488	87,916	87,840
Diluted	89,882	89,456	90,487	89,980

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COGNOS INCORPORATED
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All amounts in United States dollars, unless otherwise stated)
(In accordance with U.S. GAAP)

4. Intangible Assets

	As at November 30, 2002		As at February 28, 2002
	Cost	Accumulated Amortization	Cost	Accumulated Amortization	Amortization Rate
	($000s)		($000s)
Acquired Technology	$  13,681	$ 10,664	$   13,681	$  8,720	20%
Deferred Compensation	8,945	8,700	8,945	8,286	Compensation Period
	22,626	$ 19,364	22,626	$17,006
	(19,364)		(17,006)
Net book value	$    3,262		$     5,620

Amortization of intangible assets was $759,000 and $1,290,000 in the quarters ended November 30, 2002 and November 30, 2001, respectively, and was $2,358,000 and $3,993,000 in the nine months ended November 30, 2002 and November 30, 2001, respectively. The estimated amortization expense related to intangible assets is as follows ($000s):

2003 (Q4)	$  680
2004	2,575
2005	7

5. Income Taxes

The Corporation provides for income taxes in its quarterly unaudited financial statements based on the estimated effective tax rate for the full fiscal year.

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COGNOS INCORPORATED
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All amounts in United States dollars, unless otherwise stated)
(In accordance with U.S. GAAP)

6. Net Income per Share

The reconciliation of the numerator and denominator for the calculation of basic and diluted net income per share is as follows: (000s except per share amounts)

	Three months ended November 30,		Nine months ended November 30,
	2002	2001	2002	2001
Basic Net Income per Share
Net income	$19,929	$13,286	$43,579	$9,288
Weighted average number of shares outstanding	87,845	87,488	87,916	87,840
Basic net income per share	$0.23	$0.15	$0.50	$0.11
Diluted Net Income per Share
Net income	$19,929	$13,286	$43,579	$9,288
Weighted average number of shares outstanding	87,845	87,488	87,916	87,840
Dilutive effect of stock options	2,037	1,968	2,571	2,140
Adjusted weighted average number of shares outstanding	89,882	89,456	90,487	89,980
Diluted net income per share	$0.22	$0.15	$0.48	$0.10

7. Comprehensive Income

Comprehensive income includes net income and other comprehensive income (OCI). OCI refers to changes in net assets from transactions and other events, and circumstances other than transactions with stockholders. These changes are recorded directly as a separate component of Stockholders’ Equity and excluded from net income. The only other comprehensive income item for the Corporation relates to foreign currency translation adjustments pertaining to those subsidiaries not using the U.S. dollar as their functional currency net of derivative gains or losses.

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COGNOS INCORPORATED
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All amounts in United States dollars, unless otherwise stated)
(In accordance with U.S. GAAP)

        The components of comprehensive income were as follows ($000’s):

	Three months ended November 30,		Nine months ended November 30,
	2002	2001	2002	2001
Net income	$19,929	$13,286	$43,579	$  9,288
Other comprehensive income (expense):
Foreign currency translation adjustments	(286)	(1,555)	473	(3,431)
Comprehensive income	$19,643	$11,731	$44,052	$  5,857

8. Segmented Information

The Corporation has one reportable segment—computer software products.

9. Secondary Offering

On July 16, 2002 the Corporation filed a final registration statement with the United States Securities and Exchange Commission and a Canadian prospectus with Canadian securities regulators for a secondary offering of 3,600,000 common shares at a price to the public of $17.50 per share. All of the common shares in the offering were sold by certain entities affiliated with Michael U. Potter. The Corporation did not receive any proceeds from the sale of the shares. The Corporation incurred costs related to the filing of this secondary offering and those costs were expensed during the quarter ended August 31, 2002. Under this secondary offering, the Corporation repurchased 180,000 of its own shares at an aggregate purchase price of $3,150,000.

10. Subsequent Event

On January 10, 2003, subsequent to the quarter ended November 30, 2002, the Corporation completed the acquisition of privately-held Adaytum, Inc. (“Adaytum”), based in Minneapolis, Minnesota. Adaytum is a leading global provider of enterprise performance planning software. The Corporation entered into an Agreement and Plan of Reorganisation dated December 19, 2002 (the “Merger Agreement”). The total merger consideration is approximately $157 million, after adjustments provided for in the Merger Agreement. In addition, the Corporation assumed certain stock options that were outstanding under Adaytum’s stock option plan.

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Item 2.

COGNOS INCORPORATED

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(in United States dollars, unless otherwise indicated, and in accordance with U.S. GAAP)

The following information should be read in conjunction with the unaudited Consolidated Financial Statements and Notes included in Item 1 of this Quarterly Report and can also be read in conjunction with the audited Consolidated Financial Statements and Notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report for the fiscal year ended February 28, 2002 (fiscal 2002).

OVERVIEW

Cognos is a leading global provider of business intelligence software. Our solution helps improve business performance by enabling effective decision-making at all levels of the organization through the consistent reporting and analysis of data derived from various sources. Using our software, customers can gain valuable insights that can be used to improve operational effectiveness, enhance customer satisfaction, accelerate corporate response times and, ultimately, increase revenues and profits. Our integrated solution consists of our suite of business intelligence components, analytical applications, and performance management applications. To complement this solution, on January 10, 2003, subsequent to the quarter ended November 30, 2002, we acquired privately-held Adaytum, Inc., a leading global provider of enterprise performance planning software.

Our customers can strategically apply our software solution across the extended enterprise to address their need for corporate performance management (CPM). By allowing timely analysis of data from disparate systems, CPM enables organizations to measure execution against business strategy to ensure the two are aligned at all levels. Our solution for CPM allows users to effectively manage the full business cycle with planning, budgeting, reporting, analysis, and scorecarding products.

RESULTS OF OPERATIONS

Revenue for the quarter ended November 30, 2002 was $138.1 million, an 11% increase from revenue of $124.2 million for the same quarter last year. Pretax income for the quarter ended November 30, 2002 was $29.3 million, compared to pretax income of $18.8 million in the same quarter last year. Net income for the current quarter was $19.9 million, compared to net income of $13.3 million for the same quarter last year. Diluted net income per share was $0.22 for the current quarter, compared to diluted net income per share of $0.15 for the same quarter last year. Basic net income per share was $0.23 and $0.15 for the quarters ending November 30, 2002 and November 30, 2001, respectively.

Revenue for the nine months ended November 30, 2002 was $387.3 million, an 11% increase from revenue of $348.5 million for the same period last year. Pretax income for the nine months ended November 30, 2002 was $64.1 million, compared to pretax income of $13.2 million in the

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same period last year. Net income for the current nine months was $43.6 million compared to net income of $9.3 million for the same period last year. Diluted net income per share was $0.48 for the nine months ended November 30, 2002, compared to $0.10 for the same period last year. Basic net income per share was $0.50 for the nine-month period ending November 30, 2002 compared to $0.11 for the same period last year. The results for the nine months ended November 30, 2001 included a special charge of $12.8 million. During the quarter ended May 31, 2001 uncertain economic conditions affected our customers’ information technology spending in our principal markets and therefore we undertook a restructuring plan to align our cost structure and operations to the economic environment prevalent at that time. Excluding the effect of this special charge, pro-forma net income for the nine months ended November 30, 2001 would have been $18.3 million. This pro-forma information is provided for comparability regarding our on-going operating performance and is unlikely to be comparable to any similar measures in the financial information filed by other issuers. Management uses this pro-forma measure to analyze our on-going operations and believes that it is useful to investors in comparing the period-to-period performance of our core business operations. The improvement in operating performance in the nine months ended November 30, 2002 as compared to the same period in the previous year reflects the strength of our business model which is designed to fully engage the enterprise customer, the strength of our product offerings in the business intelligence (“BI”) market, and changes in our internal costs attributable to ongoing expense management and the prior year’s restructuring plan.

Total operating expenses for the quarter ended November 30, 2002 were $110.1 million, a 3% increase from operating expenses of $107.2 million for the same quarter last year. Operating margin for the quarter ended November 30, 2002 was 20%, compared to 14% for the same quarter last year.

Total operating expenses for the nine months ended November 30, 2002 were $327.5 million, a 4% decrease from operating expenses of $342.2 million for the same period last year. Operating margin for the nine months ended November 30, 2002 was 15%, compared to 2% for the same period last year. Excluding the effect related to the special charge discussed above, pro-forma operating expenses in the nine-month period ended November 30, 2001 would have been $329.4 million and pro-forma operating margin would have been 5%. These special charges primarily related to involuntary employee separations. This pro-forma information is provided for greater comparability regarding our on-going operating performance and is unlikely to be comparable to any similar measures in the financial information filed by other issuers. Management uses these pro-forma measures to analyze our on-going operations and believes that it is useful to investors in comparing the period-to-period performance of our core business operations.

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The following table sets out, for the periods indicated, a reconciliation of certain GAAP financial measures to pro-forma financial measures discussed above (000s except percentages):

	Three months ended November 30,		Nine months ended November 30,
	2002	2001	2002	2001
Reported operating expenses	$110,076	$107,194	$327,520	$342,245
Special charges	-	-	-	(12,798)
Pro-forma operating expenses	$110,076	$107,194	$327,520	$329,447
Reported operating margins	20%	14%	15%	2%
Special charges margin adjustment	-	-	-	3%
Pro-forma operating margins	20%	14%	15%	5%
Reported net income	$19,929	$13,286	$43,579	$ 9,288
Special charges (after tax)	-	-	-	9,023
Pro-forma net income	$19,929	$13,286	$43,579	$18,311

We operate internationally, with a substantial portion of our business conducted in foreign currencies. Accordingly, our results are affected by year-over-year exchange rate fluctuations of the United States dollar relative to various European currencies, to the Canadian dollar, and to a lesser extent, other foreign currencies. The effect of foreign exchange rate fluctuations improved the overall revenue growth by approximately three and two percentage points for the quarter and nine months ended November 30, 2002, respectively, and increased the growth in operating expense by two percentage points for both the quarter and nine-months ended November 30, 2002.

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The following table sets out, for the periods indicated, the percentage that each income and expense item bears to revenue, and the percentage change of each item as compared to the indicated prior period.

	Percentage of Revenue						Percentage Change
	Three months ended November 30,		Nine months ended November 30,				Three months	Nine months
					ended November 30,
	2002	2001	2002	2001		2001 to 2002
Revenue	100.0%	100.0%	100.0%	100.0%		11.2%			11.1%
Operating expenses
Cost of product license	0.5	0.7	0.6	0.8		(14.8)			(25.6)
Cost of product support	3.8	3.1	3.8	3.4		37.0			22.5
Selling, general, and administrative	62.2	68.4	65.5	74.4		1.1			(2.1)
Research and development	13.2	14.1	14.7	15.9		3.9			2.8
Special charges	0.0	0.0	0.0	3.7		*			*
Total operating expenses	79.7	86.3	84.6	98.2		2.7			(4.3)
Operating income	20.3	13.7	15.4	1.8		64.8			*
Interest expense	(0.2)	(0.1)	(0.1)	(0.1)		*			72.0
Interest income	1.1	1.6	1.2	2.1		(21.9)			(33.9)
Income before taxes	21.2	15.2	16.5	3.8		55.5			*
Income tax provision	6.8	4.5	5.2	(1.1)		68.7			*
Net income	14.4%	10.7%	11.3%	2.7%		50.0%			*

*- not meaningful

Revenue

Our total revenue was $138.1 million for the quarter ended November 30, 2002, an increase of $13.9 million or 11%, compared to the quarter ended November 30, 2001. Our total revenue was $387.3 million for the nine months ended November 30, 2002, an increase of $38.8 million or 11% compared to the nine months ended November 30, 2001.

Our total revenue was derived primarily from our suite of business intelligence products, principally Web versions of PowerPlay® and Impromptu®. Contributing to a lesser extent were Cognos Visualizer, Cognos Finance, Cognos Query, DecisionStream™, NoticeCast and our Analytical Application packages. At the end of fiscal 2002 we released Cognos Series 7, the latest integrated version of our suite of business intelligence components. We believe that enterprise-wide deployment of business intelligence products is the trend in the industry and that it will continue to increase as a percentage of our total revenue. An emerging trend in the market for business intelligence is the growing demand for pre-packaged solutions that shorten time to implementation and results. Our Analytic Applications address this trend as they extend the value of investments in Enterprise Resource Planning (ERP) and other operational systems. Total revenue (license, support, and services revenue) derived from our business intelligence products was $130.3 million in the quarter ended November 30, 2002, an increase of $16.2 million or 14%, and was $362.5 million for the nine months ended November 30, 2002, an

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increase of $42.9 million or 13% when compared to the corresponding periods in the prior fiscal year. Total revenue from these business intelligence products was 94% and 92% of total revenue for the quarters ended November 30, 2002 and November 30, 2001, respectively. On a year-to-date basis, we derived 94% of total revenue from these products, compared to 92% in the corresponding period last year.

Total revenue (license, support, and services revenue) from our application development tools, PowerHouse® and Axiant®, was $7.8 million for the quarter ended November 30, 2002, a decrease of $2.3 million or 23%, and was $24.8 million for the nine months ended November 30, 2002, a decrease of $4.1 million or 14% compared to the corresponding period in the prior fiscal year. We believe that, in both the short and long-term, revenues from these products will continue to decline.

The overall change in total revenue from the three revenue categories in the quarter ended November 30, 2002 from November 30, 2001 was as follows: a 5% increase in product license revenue, a 19% increase in product support revenue, and an 12% increase in services revenue. The change for the same categories for the nine months was as follows: 9%, 18%, and 2%, respectively.

In the quarter ended November 30, 2002 the percentage of revenue from our three geographic regions, North America (includes Latin America), Europe (consists of UK and Continental Europe), and Asia/Pacific (consists of Australia and countries in the Far East) was 61%, 32%, and 7%, respectively as compared to 62%, 31%, and 7%, respectively for the comparative quarter ended November 30, 2001. On a year-to-date basis, for the same geographic regions the percentage of revenue was 63%, 30%, and 7% and 62%, 31%, and 7% for the periods ended November 30, 2002 and November 30, 2001, respectively. During the quarter ended November 30, 2002 revenue from North America increased 9%, revenue from Europe increased 14%, and revenue from Asia/Pacific increased by 21%. The growth for the same categories for the nine months was as follows: 12%, 8%, and 13% respectively.

Our growth rate in Asia/Pacific for the three months ended November 30, 2002 reflects the growth in Singapore and the Australia/New Zealand region during the quarter. Our growth rate in Europe for the quarter reflects growth in the UK as well as Northern Europe.

Product License Revenue

Product license revenue was $62.2 million in the quarter ended November 30, 2002, an increase of $3.1 million or 5%, and was $167.1 million for the nine months ended November 30, 2002, an increase of $14.3 million or 9% compared to the corresponding periods in the prior fiscal year. The increase in product license revenue during the three and nine months ended November 30, 2002 as compared to the same period in the prior year reflects the strength of our business model which is designed to fully engage the enterprise customer and the strength of our product offerings in the BI market. Additionally, during the three and nine months ended November 30, 2001 uncertain economic conditions affected our customers’ information technology spending in our principal markets. This affected the sales of our business intelligence products in that period. Customer purchasing behavior remains challenging in the current economic environment, however we believe that the long-term prospects for the business intelligence market are promising. Product license revenue accounted for 45% of total revenue in the three months ended November 30, 2002 compared to 48% for the corresponding period in the prior fiscal year,

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and accounted for 43% of total revenue in the nine months ended November 30, 2002 and 44% for the corresponding period in the prior fiscal year.

Product license revenue from the business intelligence products was $60.3 million for the quarter ended November 30, 2002, an increase of $3.8 million or 7%, and was $161.3 million for the nine months ended November 30, 2002, an increase of $15.1 million or 10% compared to the corresponding periods in the prior fiscal year. Product license revenue from business intelligence products accounted for 97% and 96% of total product license revenue for the quarters ended November 30, 2002 and 2001. On a year-to-date basis, we derived 97% of product license revenue from these products as compared to 96% in the corresponding period in the prior fiscal year.

Product license revenue from application development tools was $1.9 million for the quarter ended November 30, 2002, a decrease of $0.7 million or 27%, and was $5.8 million for the nine months ended November 30, 2002, a decrease of $0.9 million or 13% compared to the corresponding periods in the prior fiscal year. We believe in both the short and long term, the trend of decreasing product license revenue from these products will continue.

Product Support Revenue

Product support revenue was $52.9 million in the quarter ended November 30, 2002, an increase of $8.3 million or 19%, and was $152.3 million for the nine months ended November 30, 2002, an increase of $23.3 million or 18% compared to the corresponding periods in the prior fiscal year. The increase in the dollar amounts was the result of the positive rate of renewal of support contracts and the expansion of our customer base.

Product support revenue accounted for 38% and 36% of our total revenue in the quarters ended November 30, 2002 and 2001, respectively, and accounted for 39% of total revenue for the nine months ended November 30, 2002 and 37% for the corresponding period in the prior fiscal year.

Product support revenue from the business intelligence products comprised 89% and 84% of the product support revenue for the quarters ended November 30, 2002 and 2001, respectively and comprised 88% and 83% of product support revenue for the nine months ended November 30, 2002 and November 30, 2001, respectively. Support revenue from the business intelligence products increased by 26% in the quarter ended November 30, 2002, and support revenue from the application development tools decreased by 19%, compared to the corresponding quarter in the prior fiscal year. For the nine months ended November 30, 2002, support revenue from the business intelligence products increased by 25%, whereas support revenue from the application development tools decreased by 15%, compared to the corresponding period in the prior year.

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Services Revenue

Services revenue (training, consulting, and other revenue) was $23.0 million in the quarter ended November 30, 2002, an increase of $2.5 million or 12%, and was $67.9 million in the nine months ended November 30, 2002 an increase of $1.3 million or 2% compared to the corresponding periods in the prior fiscal year. Services revenue accounted for 17% and 18% of our total revenue for the three and nine months ended November 30, 2002, respectively, as compared to 16% and 19% for the corresponding periods in the prior fiscal year.

In the quarter ended November 30, 2002, services revenue associated with the business intelligence products contributed $22.8 million, an increase of $2.7 million or 13%, and was $67.2 million, an increase of $1.3 million or 2% in the nine months ended November 30, 2001 compared to the corresponding periods in the prior fiscal year. The increase in the dollar amounts was primarily attributable to an increase in consulting revenue partially offset by a decrease in education revenue. During the three and nine months ended November 30, 2001 uncertain economic conditions affected our customers’ information technology spending in our principal markets. This affected the sales of, and services revenue from our business intelligence products in that period. Customer purchasing behavior remains challenging in the current economic environment, however we believe that the long-term prospects for the business intelligence market are promising. Total services revenue associated with our application development tools for the quarter was $0.2 million, a $0.2 million decrease from the corresponding period in the prior fiscal year and was $0.7 million for the nine months ended November 30, 2002, an immaterial decrease from the same period last year.

Service revenue associated with business intelligence products contributed 99% of the total services revenue for both the quarter and nine months ended November 30, 2002. Comparatively, services revenue associated with business intelligence products contributed 98% of services revenue for the quarter and nine months ended November 30, 2001.

Cost of Product License

The cost of product license consists primarily of royalties for technology licensed from third parties, as well as the costs of materials and distribution related to licensed software.

The cost of product license revenue was $0.7 million, a decrease of $0.1 million or 15% in the quarter ended November 30, 2002, and was $2.2 million in the nine months ended November 30, 2001, a decrease of $0.7 million or 26% compared to the corresponding periods in the prior fiscal year. These costs represented 1% of product license revenue for both the quarter and nine months ended November 30, 2002, as compared to 1% of product license revenue for the quarter ended November 30, 2001 and 2% of product license revenue for the nine months ended November 30, 2001. The decrease in these costs was the result of decreases in materials and distribution costs.

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Cost of Product Support

The cost of product support includes the costs associated with resolving customer inquiries and other telesupport and websupport activities, royalties in respect of technological support received from third parties, and the cost of materials delivered in connection with enhancement releases.

The cost of product support revenue was $5.2 million, an increase of $1.4 million or 37% in the quarter ended November 30, 2002, and was $14.7 million, an increase of $2.7 million or 23% in the nine months ended November 30, 2002 compared to the corresponding periods in the prior fiscal year.

The cost of product support represented 10% of total product support revenue for both the quarter and nine months ended November 30, 2002 as compared to 9% for both of the corresponding periods in prior fiscal year. The increase in the cost of product support is the result of increases in telesupport and websupport costs as we brought in additional resources to enhance our customer service through the web and telephonic support systems. This increase was offset slightly by a decrease in royalty costs.

Selling, General, and Administrative

Selling, general, and administrative (SG&A) expenses were $85.9 million, an increase of $0.9 million or 1% in the quarter ended November 30, 2002, and were $253.7 million, a decrease of $5.5 million or 2% in the nine months ended November 30, 2002 compared to the corresponding periods in the prior fiscal year. These costs decreased as a percentage of revenue, representing 62% and 65% for the three and nine months ended November 30, 2001, respectively compared to 68% and 74% for the corresponding periods in the prior fiscal year.

The increase in these expenses in the three months ended November 30, 2002 was predominantly the result of increases in staff related costs and services purchased externally partially offset by decreases in amortization expense. For the nine months ended November 30, 2002 the decrease in selling, general, and administrative expenses was the result of decreases in amortization expense and staff development costs, partially offset by increased staff related costs, and services purchased externally. The average number of employees within selling, general, and administrative increased by 6% in the three months ended November 30, 2002, and remained flat for the nine months ended November 30, 2002, when compared to the corresponding periods in the prior fiscal year. Amortization expense in the three and nine months ended November 30, 2002 decreased by $1.1 million and $3.3 million, respectively as the result of the implementation of the non-amortization provisions of SFAS No. 142 (See Note 3 of the Condensed Notes to the Consolidated Financial Statements). Amortization expense also decreased by $0.9 million and $2.9 million in the three and nine months ended November 30, 2002, respectively, from the same periods last year, as a result of certain intangible assets becoming fully amortized.

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Research and Development

Research and development (R&D) costs were $18.3 million, an increase of $0.7 million or 4% in the quarter ended November 30, 2002 and were $57.0 million, an increase of $1.6 million or 3% in the nine months ended November 30, 2002 compared to the corresponding periods in the prior fiscal year. The increase for the quarter was predominantly the result of increases in compensation costs, whereas the increase for the nine-month period was the result of increases in compensation cost and increases associated with services purchased externally. The average number of employees within R&D increased 5% for the three months ended November 30, 2002, and increased 1% for the nine months ended November 30, 2002 when compared to the corresponding periods of the prior year.

During the quarter ended November 30, 2002, we continued to invest in R&D activities for our next generation of business intelligence solutions which are the foundation of our CPM vision. During the current quarter we released Cognos Metrics Manager, a scorecarding solution that enables organizations to manage performance by mapping strategy to execution through metrics. We also announced, for release in the next quarter three process analytic application bundles: Cognos Customer Analytics, Cognos Financial Analytics, and Cognos Supply Chain Analytics. These bundles enable cross-functional analytics and an integrated view of a business. During the quarter we also announced, for availability in December 2002, Cognos CPM for Finance which integrates our product offerings within forecasting, budgeting, planning, and consolidation with reporting, analysis, and metrics management to enable a company to align core financial processes with company strategy and performance management.

We currently do not have any software development costs capitalized on our balance sheet. Software development costs are expensed as incurred unless they meet generally accepted accounting criteria for deferral and amortization. Software development costs incurred prior to the establishment of technological feasibility do not meet these criteria, and are expensed as incurred. Capitalized costs are amortized over a period not exceeding 36 months. No costs were deferred in the quarters ended November 30, 2002 and November 30, 2001. Costs were not deferred in the period because either no projects met the criteria for deferral or, if met, the period between achieving technological feasibility and the general availability of the product was short, rendering the associated costs immaterial.

Special Charges

Business Restructuring Charge

During the quarter ended May 31, 2001, we implemented a restructuring plan to align our cost structure and operations to the prevailing economic environment, resulting in a pretax business restructuring charge to earnings of $12.8 million. Business restructuring charges primarily related to involuntary employee separations for approximately 300 employees, as well as asset write-downs, and accruals for net costs of abandoning leases and related write-down of leasehold improvements. The employee separations impacted all functional groups and geographic regions. In the fourth quarter of fiscal 2002, $2.6 million of the original accrual was reversed into income as a result of revisions to prior cost assumptions.

Cost savings as a result of the restructuring plan affect compensation, amortization, and lease expenses. This decrease in costs primarily impacts selling, general, and administration expense

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and research and development expense. The expense reductions took effect in the second quarter of fiscal 2002. The restructuring was substantially complete by the quarter ended May 31, 2002.

Interest Income and Expense

Net interest income was $1.3 million, a decrease of $0.5 million or 30% in the quarter ended November 30, 2002, and was $4.3 million, a decrease of $2.6 million or 38% in the nine months ended November 30, 2002 compared to the corresponding periods in the prior fiscal year. The decrease was primarily attributable to a decrease in the average effective interest rates partially offset by the larger average portfolio.

Income Tax Provision

Our tax rate is affected by the relative profitability of our operations in various geographic regions. In the three and nine months ended November 30, 2002, we recorded an income tax provision of $9.4 million and $20.5 million, respectively representing an effective income tax rate of 32%. Comparatively, in the three and nine months ended November 30, 2001 we recorded an income tax provision of $5.6 million and $3.9 million, respectively, representing an effective income tax rate of 29.5%.

LIQUIDITY AND CAPITAL RESOURCES

As of November 30, 2002 we had $338.1 million in cash, cash equivalents, and short-term investments, an increase of $23.6 million from February 28, 2002. In addition, we have in place an unsecured credit facility. The credit facility permits us to borrow funds and issue letters of credit or guarantee up to Cdn$12.5 (US$8.0) million, subject to certain covenants. As of November 30, 2002, there were no direct borrowings under this credit facility.

As of November 30, 2002, we had a total of $10.8 million of long-term liabilities (including the current portion of $7.4 million presented in accrued charges), consisting of amounts due related to the settlement of a patent litigation and other long-term liabilities related to acquisitions. A patent litigation settlement payment of $1.8 million was made in the quarter ended November 30, 2002. Payments of approximately $1.8 million will be made each quarter for the next six quarters in relation to the settlement.

As of November 30, 2002, working capital was $262.3 million, an increase of $34.8 million from February 28, 2002. The increase was primarily due to increases in short-term investments and decreases in accounts payable, accrued charges, income taxes payable, and deferred product support revenue which were partially offset by decreases in cash and cash equivalents and accounts receivable. The days sales outstanding ratio, calculated based on ending accounts receivable balances and quarterly revenue (“DSO”), was 67 days as at November 30, 2002 as compared with DSO of 72 days as at February 28, 2002.

Cash provided by operating activities (after changes in non-cash working capital items) for the nine months ended November 30, 2002 was $48.8 million, an $11.2 million decrease when compared to the corresponding period in the prior fiscal year. During the nine months ended

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November 30, 2002 we reported a net income of $43.6 million as compared to net income of $9.3 million in the same period in the prior year which reflects the strength of our business model. During the prior nine months ended November 30, 2001 we achieved a dramatic decrease in our accounts receivable balances through a conscious effort to improve our collections experience, which contributed to the cash provided by operating activities in that period. We have been able to maintain this level of collection experience through the current nine-month period and therefore we have not experienced the dramatic inflows of cash reported in the comparative period.

Cash used in investing activities was $49.9 million for the nine months ended November 30, 2002, compared to cash used of $6.7 million in the corresponding period in the prior fiscal year. During the current nine-month period, we used $38.6 million related to the investment in short-term investments (net of the maturity of short-term investments) compared to the receipt of $3.7 million related to the maturity of short-term investments (net of investments in short-term investments) in the corresponding period in the prior fiscal year. During the nine-month period ended November 30, 2002 additions to fixed assets were $11.3 million, as compared to $10.4 million for the corresponding period in fiscal 2001. Additions during both quarters were primarily computer hardware and software.

Cash used in financing activities was $15.6 million for the nine months ended November 30, 2002, compared to cash used in financing activities of $13.6 million in the corresponding period in the prior fiscal year. We issued 755,000 common shares, valued at $9.8 million, during the nine months ended November 30, 2002, compared to the issue of 622,000 shares valued at $7.1 million during the corresponding period in the prior fiscal year. The issuance of shares in both periods was pursuant to our stock purchase plan and the exercise of stock options pursuant to stock option plans. Financing activities for the nine-month period ended November 30, 2002 included the repurchase of our own shares in the open market. We repurchased 910,500 shares at a cost of $20.0 million; in comparison, we repurchased 1,251,600 shares at a cost of $20.0 million in the corresponding period in the prior fiscal year.

The share repurchases in the current nine-month period ended November 30, 2002 were part of two open market share repurchase programs, as well as shares purchased under our secondary offering of common shares (See Note 9 of the Condensed Notes to the Consolidated Financial Statements). In October 2001, we adopted a program that enabled us to purchase up to 4,400,943 common shares (not more than 5% of those issued and outstanding) between October 9, 2001 and October 8, 2002. Under this program the Corporation repurchased 388,100 of its shares for $10.0 million in the nine months ended November 30, 2002. Purchases were made on the Nasdaq Stock Market at prevailing open market prices and paid out of general corporate funds. All repurchased shares were cancelled.

On October 3, 2002 we announced a new stock repurchase program that enables us to purchase up to 4,398,820 common shares (not more than 5% of those shares issued and outstanding) between October 9, 2002 and October 8, 2003. Any purchases will be done on the Toronto Stock Exchange or the Nasdaq Stock Market at prevailing open market prices and paid out of general corporate funds. This program does not commit us to make any share repurchases. All repurchased shares will be cancelled. Under this program the Corporation repurchased 342,400 of its shares for $6.9 million in the nine months ended November 30, 2002. Purchases were made on the Nasdaq Stock Market at prevailing open market prices and paid out of general corporate funds. All repurchased shares will be cancelled.

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Our policy with respect to foreign currency exposure is to manage our financial exposure to certain foreign exchange fluctuations with the objective of neutralizing some of the impact of foreign currency exchange movements. To achieve this objective, we enter into foreign exchange forward contracts to hedge portions of the net investment in our various subsidiaries. We enter into these foreign exchange forward contracts with major Canadian chartered banks, and therefore do not anticipate non-performance by these counterparties. We limit these foreign exchange forward contracts to a maximum term of six months. The amount of the exposure on account of any non-performance is restricted to the unrealized gains in such contracts. As of November 30, 2002, we had foreign exchange forward contracts all maturing on February 27, 2003 to exchange various foreign currencies in the amount of $14.8 million.

We believe that our current cash, cash equivalents, and short-term investments balance (subsequent to the acquisition of Adaytum, Inc., see Note 10 to the Condensed Notes to the Consolidated Financial Statements) and funds generated from operations, if any, will be adequate to finance operations and meet any capital requirements over the next twelve months.

CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

This Form 10-Q contains forward-looking statements, expressed or implied, relating to, among other things, our expectations concerning future financial performance and continuing business momentum, future growth opportunities, the success and soundness of our business model and our sales, marketing, and technology strategies; the trends and opportunities in the business intelligence (“BI”) marketplace; the development, introduction, shipment, and marketing of our current and future products; and our leadership position in the BI market.

These forward-looking statements are neither promises nor guarantees, but involve risks and uncertainties that may cause actual results to differ materially from those in the forward-looking statements. Factors that may cause such differences include, but are not limited to: our ability to develop and introduce new products and enhancements in the BI software market; the impact of global economic conditions on our business and our ability to implement timely and appropriate remedial measures; our ability to obtain and close sales, particularly large enterprise transactions; our ability to select and implement appropriate business models and strategies; our ability to achieve and maintain revenue growth or to anticipate a decline in revenue from any of our products or services; fluctuations in our quarterly and annual operating results based on historical patterns, which may cause our stock price to fluctuate or decline; rapid technological change in the BI software market; new product introductions and enhancements by competitors; changing customers demands; our ability to establish and maintain competitive advantage; our reliance on partners and other third party distribution channels to market and distribute our products; our ability to maintain or obtain third-party technology licenses relating to one or more of our products; unauthorized use of our intellectual property; claims by third parties that our software infringes their intellectual property; the risks inherent in international operations, such as currency exchange rate fluctuations; our ability to identify, hire, train, motivate, and retain highly qualified management and other key personnel; our ability to identify, pursue, and complete acquisitions which could divert management attention and financial resources and not produce desired business results, and our ability to complete the acquisition of Adaytum, Inc. and integrate the acquired operations into our existing operations. Readers should not place undue reliance on any such forward-looking statements, which speak only as of the date they are

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made. We disclaim any obligation to publicly update or revise any such statement to reflect any change in our expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements. A detailed discussion of each of these risk factors is contained under the heading “Certain Factors That May Affect Future Results” in our most recent Annual Report on Form 10-K and under the heading “Risk Factors” in our Form F-10 Registration Statement, each of which is filed with the United States Securities and Exchange Commission.

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Item 3. Quantitative and Qualitative Disclosure about Market Risk

Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily a result of fluctuations in interest rates and foreign currency exchange rates. We do not hold or issue financial instruments for trading purposes.

Interest Rate Risk

Our exposure to market rate risk for changes in interest rates relates primarily to our investment portfolio. The investment of cash is regulated by our investment policy of which the primary objective is security of principal. Interest income on our cash, cash equivalents, and short-term investments is subject to interest rate fluctuations, but we believe that the impact of these fluctuations does not have a material effect on our financial position due to the short-term nature of these financial instruments. For the quarter ended November 30, 2002, a 100 basis-point adverse change in interest rates would not have had a material effect on our consolidated financial position, earnings or cash flows.

Foreign Currency Risk

We operate internationally; accordingly, a substantial portion of our financial instruments are held in currencies other than the United States dollar. Our policy with respect to foreign currency exposure is to manage financial exposure to certain foreign exchange fluctuations with the objective of neutralizing some of the impact of foreign currency exchange movements. To achieve this objective, we enter into foreign exchange forward contracts to hedge portions of the net investment in various subsidiaries. The forward contracts are typically between the United States dollar and the British pound, the euro, and the Australian dollar. Sensitivity analysis is used to measure our foreign currency exchange rate risk. As of November 30, 2002, a 10% adverse change in foreign exchange rates versus the U.S. dollar would not have had a material effect on our reported cash, cash equivalents, and short-term investments.

Item 4. Controls and Procedures

a)     Evaluation of disclosure controls and procedures.

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the disclosure controls and procedures as of a date within 90 days before the filing date of this quarterly report. Based on this evaluation the Chief Executive Officer and Chief Financial Officer conclude that the disclosure controls and procedures (as defined in Rule 13a-14(c) of the Securities Exchange Act of 1934) effectively ensure that information required to be disclosed in our filings and submissions under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

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b)    Changes in internal controls

There have been no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the evaluation of the internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses.

PART II — OTHER INFORMATION

Item 1.     Legal Proceedings

The Corporation is not a party to any litigation that, in the opinion of management, could reasonably be expected to have material adverse impact on the Corporation’s financial position.

In addition, we and our subsidiaries may, from time to time be involved in other legal proceedings, claims, and litigation that arise in the ordinary course of business.

Item 5.     Other Information

On September 25, 2002, the Board of Directors of the Corporation adopted the 2002-2005 Restricted Share Unit Plan pursuant to which employees, officers, and directors of the Corporation and its subsidiaries are eligible to participate. Under the plan, the Human Resources and Compensation Committee is authorized to grant awards of restricted share units to participants, up to an aggregate of 2,000,000 restricted share units. Subject to the vesting and other provisions set out in each participant’s award agreement, each restricted share unit will be exchangeable for one common share of the Corporation. The common shares for which restricted share units may be exchanged will be purchased on the open market by a trustee appointed and funded by the Corporation. As no common shares will be issued by the Corporation pursuant to the plan, the plan is non-dilutive to existing shareholders.

Item 6.    Exhibits and Reports on Form 8-K

a) Exhibits

3.1 Articles of Incorporation and amendments thereto

10.21 2002-2005 Restricted Share Unit Plan

99 Selected Consolidated Financial Statements in U.S. Dollars and in accordance with Canadian Generally Accepted
  Accounting Principles

99.1 Management's Discussion and Analysis of Financial Condition and Results of Operations - Canadian Supplement

99.2 Certification Pursuant to 18 U.S.C Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002

99.3 Certification Pursuant to 18 U.S.C Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002

b)    Reports on Form 8-K

There were no reports on Form 8-K filed during the three months ended November 30, 2002.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	COGNOS INCORPORATED
	(Registrant)
January 13, 2003	/s/ Tom Manley
Date	Tom Manley Senior Vice President, Finance &   Administration and Chief Financial Officer   (Principal Financial Officer and Chief Accounting    Officer)

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CERTIFICATIONS

I, Renato Zambonini, Chief Executive Officer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cognos Incorporated;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

January 13, 2003	/s/ Renato Zambonini
Date	Renato Zambonini, Chief Executive Officer

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I, Tom Manley, Senior Vice President, Finance & Administration and Chief Financial Officer (Principal Financial Officer and Chief Accounting Officer), certify that:

1. I have reviewed this quarterly report on Form 10-Q of Cognos Incorporated;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

January 13, 2003	/s/ Tom Manley
Date	Tom Manley Senior Vice President, Finance &   Administration and Chief Financial Officer   (Principal Financial Officer and Chief Accounting Officer)

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EXHIBIT INDEX

EXHIBIT NO.	DESCRIPTION	PAGE
3.1	Articles of Incorporation and amendments thereto	31-40
10.21	2002-2005 Restricted Share Unit Plan	41-44
99	Selected Consolidated Financial Statements and Notes in U.S. Dollars and in accordance with Canadian Generally Accepted Accounting Principles	45-54
99.1	Management’s Discussion and Analysis of Financial Condition and Results of Operations - Canadian Supplement	55-56
99.2	Certification Pursuant to 18 U.S.C Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002	57
99.3	Certification Pursuant to 18 U.S.C Section 1350, As Adopted Pursuant to Section 906 of The Sarbanes-Oxley Act of 2002	58

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EX-3.(I)

Exhibit 3.1

[LOGO]

Restated Certificate
of Incorporation Certificat de constitution
à jour

Canada Business
Corporations Act Loi sur les sociétés
commerciales canadiennes

COGNOS INCORPORATED/
COGNOS INCORPORÉE	74301-1

Name of corporation - Dénomination de la société Number - Numéro

I hereby certify that the Articles of Incorporation of the above-mentioned Corporation were restated under Section 174 of the Canada Business Corporations Act as set out in the attached Restated Articles of incorporation. Je certifie par les présentes que les statuts constitutifs de la société mentionnée ci-haut ont été mis à jour en vertu de l’article 174 de la Loi sur les sociétés commerciales canadiennes, tel qu’indiqué dans les statuts de mise à jour ci-joints.

         [Signature]

                              February 1, 1984

Deputy Director - Directeur Effective Date of Restatement
Date d'entrée en vigueur de la mise à jour

31

CANADA BUSINESS
CORPORATIONS ACT
FORM 7
RESTATED ARTICLES
OF INCORPORATION
(SECTION 174) [LOGO] LOI SUR LES SOCIÉTÉS
COMMERCIALES CANADIENNES
FORMULE 7
STATUTS DE MISE À JOUR
(ARTICLE 174)

____________________________________________________________________________________________________________
1 - Name of Corporation - Dénomination de la société              Corporation No.- No de la société

COGNOS INCORPORATED/COGNOS INCORPORÉE                                     74301-1
_____________________________________________________________________________________________________________
2 - The place in Canada where the registered office is situated  Lieu au Canada où est situé le
                                                                 siège social
275 Slater Street, Ottawa, Ontario K1P 5H9
______________________________________________________________________________________________________
3 - The classes and any maximum number of shares that   Catégories et tout nombre maximal d'actions
    the corporation is authorized to issue              que la société est autorisée à émettre

(1)  An unlimited number of common shares, the holders of which are entitled (a)
     to vote at all meetings of the shareholders, and; (b) to receive the
     remaining property of the Corporation upon dissolution.

(2)  An unlimited number of Preferred shares issuable in series - See Attachment A
_____________________________________________________________________________________________________________
4 - Restrictions if any on share transfers        Restrictions sur le transfert des actions s'il
                                                  y a lieu

                         N/A
_____________________________________________________________________________________________________________
5 - Number (or minimum and maximum number) of      Nombre (ou nombre minimum et maximum)
directors                                          d'administrateurs
A MINIMUM OF THREE (3) AND A MAXIMUM OF TEN (10)
__________________________________________________________________________________________________________
6 - Restrictions if any on business the corporation  Limites imposées quant aux activités que la
may carry on                                         société peut exploiter, s'il y a lieu. -

                         N/A
_________________________________________________________________________________________________________
7 - Other provisions if any                          Autres dispositions s'il y a lieu

                         N/A
_________________________________________________________________________________________________________

The foregoing restated articles of incorporation     Cette mise à jour des statuts constitutifs
correctly set out, without substantive change, the   démontre exactement sans changement substantif
corresponding provisions of the articles of          les dispositions correspondantes des statuts
incorporation as amended and supersede the original  constitutifs tels que modifiés et remplacent
articles of incorporation.                           les statuts constitutifs originaux.

_________________________________________________________________________________________________________
Date                          Signature              Description of Office - Description du poste

January 30, 1984              [signature]            General Counsel/Acting Secretary
_________________________________________________________________________________________________________
FOR DEPARTMENTAL USE ONLY                                  À L'USAGE DU MINISTÈRE SEULEMENT
_________________________________________________________________________________________________________
                                74301-1              Filed - Déposée                 2/2/84
                                                     ___________________________________________________
CCA 1389(4-79)

32

EXHIBIT A
SPECIAL RESOLUTION

It is hereby resolved as a Special Resolution that:

A. THE ARTICLES OF THE CORPORATION ARE HEREBY AMENDED BY:
 

1.	Subdividing each issued common share of the Corporation into two common shares of the Corporation; and
2.	Changing the Corporation's name from Quasar Systems Limited/Systems Quasar Limitée to Cognos Incorporated/Cognos Incorporée.
3.	Increasing the authorized capital of the Corporation by creating an unlimited number of Preferred Shares issuable in series; the preferences, rights, conditions, restrictions, limitations and prohibitions attaching to the Preferred Shares as a Class are as follows:

(1)	The Preferred Shares may at any time or from time to time be issued in one or more series, each series to consist of such number of shares as may before the issue thereof be determined by the directors. The directors of the Corporation may by resolution fix from time to time before the issue thereof, the designation, rights, privileges, restrictions and conditions attaching to the Preferred Shares of each series including, without limiting the generality of the foregoing, the rate of preferential dividends, the dates and places of payment thereof, the redemption and/or purchase prices and the terms and conditions of redemption and/or purchase, conversion rights and any purchase fund or other provisions, the whole to be subject to the following provisions and to amendment of the Articles of the Corporation bringing such resolution into effect.
(2)	The Preferred Shares shall be entitled to a preference over the common shares and any other shares of the Corporation ranking junior to the Preferred Shares with respect to the payment of dividends and in the distribution of assets in the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, or other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs.
(3)	Where any cumulative dividends or amounts payable on a repayment of capital in respect of a series of Preferred Shares are not paid in full, the shares of all series of the Preferred Shares shall participate rateably in respect of such accumulated dividends if any, in accordance with the sums that would be payable on such shares if all such dividends were declared and paid in full, and on any repayment of capital in accordance with the sums that would be payable on such repayment of capital if all sums so payable were paid in full.
(4)	Except as otherwise expressly required by law the holders of Preferred Shares shall not be entitled to receive notice of or to attend any meeting of the shareholders of the Corporation or to vote at any such meeting.
(5)	Any amendment to the Articles of the Corporation to delete or vary a preference, right, condition, restriction, limitation or prohibition attaching to the Preferred Shares as a class or to create shares ranking in priority to or on a parity with the Preferred Shares, in addition to any other authorization required by law may be authorized by at least two-thirds of the votes cast at a meeting of holders of Preferred Shares duly called for that purpose and held upon not less than 21 days notice at which the holders of at least a majority of the outstanding Preferred Shares are present or are represented by proxy. If at such meeting the holders of a majority of the outstanding Preferred Shares are not present or represented by proxy within one half hour after the time appointed for such meeting than the meeting shall be adjourned to such date being not less than 21 days thereafter and to such time and place as may be designated by the chairman, and not less than 14 days notice shall be given of the reconvening of such adjourned meeting, but it shall not be necessary in such notice to specify the purpose for which the meeting was originally called. At such adjourned meeting the holders of the Preferred Shares present or represented by proxy may transact the business for which the meeting was originally called and a resolution passed by at least two-thirds of the votes cast at such meeting shall constitute the authorization of the holders of the Preferred Shares. On every poll taken at every such meeting every holder of Preferred Shares shall be entitled to one vote in respect of each Preferred Share held. Subject to the foregoing, the formalities to be observed in respect of the giving or waiving of notice of any such meeting and the conduct thereof shall be those from time to time prescribed in the by-laws of the Corporation with respect to meetings of shareholders.

33

B. Notwithstanding the foregoing provisions of this special resolution, the directors of the Corporation may revoke the resolution before it is acted upon without further approval by the Shareholders.

34

[logo]	Consumer and	Consommation
	Corporate Affairs Canada	et Corporations Canada

Certificate of Amendment Certificat de modification

Canada Business
Corporations Act Loi sur les sociétés
commerciales canadiennes

                COGNOS INCORPORATED/                                      074301-1
                 COGNOS INCORPORÉE
________________________________________________       _____________________________________________
Name of Corporation - Dénomination de la société              Number - Numéro

I hereby certify that the Articles of the            Je certifie par les preséntes que les statuts
above-mentioned Corporation were amended             de la société mentionnée ci-haut ont été
                                                     modifiés

(a) under section 13 of the Canada Business      [ ] (a) en vertu de l'article 13 de la Loi sur
Corporations Act in accordance with the attached     les sociétés commerciales canadiennes
notice;                                              conformément à l'avis ci-joint;

(b) under Section 27 of the Canada Business      [ ] (b) en vertu de l'article 27 de la Loi sur
Corporations Act as set out in the attached          les sociétés commerciales canadiennes tel
Articles of Amendment designating a series of        qu'indiqué dans les clauses modificatrices
shares;                                              ci-jointes désignant une série d'actions;

(c) under Section 171 of the Canada Business     |X| (c) en vertu de l'article 171 de la Loi sur
Corporations Act as set out in the attached          les sociétés commerciales canadiennes tel
Articles of Amendment;                               qu'indiqué dans les clauses modificatrices
                                                     ci-jointes;

(d) under Section 185 of the Canada Business     [ ] (d) en vertu de l'article 185 de la Loi sur
Corporations Act as set out in the attached          les sociétés commerciales canadiennes tel
Articles of Reorganization;                          qu'indiqué dans les clauses de réorganisation
                                                     ci-jointes;

(e) under Section 185.1 of the Canada Business   [ ] (e) en vertu de l'article 185.1 de la Loi sur
Corporations Act as set out in the attached          les sociétés commerciales canadiennes tel
Articles of Arrangement.                             qu'indiqué dans les clauses d'arrangement
                                                     ci-jointes.

Le Directeur             July 10, 1986

[signature]              le 10 juillet 1986

Director                 Date of Amendment - Date de la modification

[LOGO]

35

CANADA BUSINESS
CORPORATIONS ACT
FORM 4
ARTICLES OF AMENDMENT
(SECTION 27 OR 171) [logo] LOI SUR LES SOCIÉTÉS
COMMERCIALES CANADIENNES
FORMULE 4
CLAUSES MODIFICATRICES
(ARTICLE 27 OU 171)

1 - Name of Corporation - Dénomination de la société      2 - Corporation No. - N° de la société

COGNOS INCORPORATED/COGNOS INCORPORÉE                                      74301-1

3 - The articles of the above-named corporation are     Les statuts de la société ci-haut mentionnée sont
   amended as follows:                                  modifiés de la façon suivante:

(1) Paragraph 3 of the Articles of the Corporation, as amended, is hereby further amended by subdividing each two (2) common shares of the Corporation into three (3) common shares of the Corporation.

Date                          Signature                 Description of Office - Description du poste

July 8, 1986                  [signature]               General Counsel/Corporate Secretary

FOR DEPARTMENTAL USE ONLY                                 À L'USAGE DU MINISTÈRE SEULEMENT

36

[logo] Industry Canada Industrie Canada

Certificate of Amendment Certificat de modification

Canada Business
Corporations Act Loi canadienne sur les sociétés
par actions

COGNOS INCORPORATED                                                      074301-1
COGNOS INCORPORÉE
______________________________________________     ______________________________________________
Name of corporation-Dénomination de la société     Corporation number-Numéro de la société


I hereby certify that the articles of the          Je certifie que les statuts de la société
above-named corporation were amended               susmentionnée ont été modifiés :


(a) under section 13 of the Canada Business        a) en vertu de l'article 13 de la Loi
Corporations Act in accordance with the        [ ] canadienne sur les sociétés par actions,
attached notice;                                   conformément à l'avis ci-joint;


(b) under section 27 of the Canada Business        b) en vertu de l'article 27 de la Loi canadienne
Corporations Act as set out in the attached    [ ] sur les sociétés par actions, tel qu'il est
articles of amendment designating a series of      indiqué dans les clauses modificatrices
shares;                                            ci-jointes désignant une série d'actions;


(c) under section 179 of the Canada Business       c) en vertu de l'article 179 de la Loi
Corporations Act as set out in the attached    |X| canadienne sur les sociétés par actions, tel
articles of amendment;                             qu'il est indiqué dans les clauses
                                                   modificatrices ci-jointes;


(d) under section 191 of the Canada Business       d) en vertu de l'article 191 de la Loi
Corporations Act as set out in the attached    [ ] canadienne sur les sociétés par actions, tel
articles of reorganization.                        qu'il est indiqué dans les clauses de
                                                   réorganisation ci-jointes.


                   [signature]


                                                   March 24, 1997 / le 24 mars 1997
               Director - Directeur                Date of Amendment - Date de modification

[LOGO]

37

Consumer and
Corporate Affairs Canada

Canada Business
Corporations Act
FORM 4
ARTICLES OF AMENDMENT
(SECTION 27 OR 177)

1 - Name of corporation                                 2 - Corporation No.

    COGNOS INCORPORATED                                     0743011
    COGNOS INCORPORÉE

3 – The articles of the above-named corporation are amended as follows:

RESOLVED, AS A SPECIAL RESOLUTION, THAT:

The Articles of the Corporation are amended as follows:

1. to provide that the board of directors shall consist of a minimum of 3 and a maximum of 12 directors;
 

2. to provide that the directors of the Corporation are empowered to determine the number of directors of the Corporation and the number of directors to be elected at the annual meeting of the shareholders; and
 

3. to provide that the directors may appoint one or more directors, who shall hold office for a term expiring not later than the close of the next annual meeting of shareholders, but the total number of directors so appointed may not exceed one third of the number of directors elected at the previous annual meeting of shareholders.
 

Date               Signature           Title
_______________________________________________________________________________
MARCH 17/97        [Signature]
                                      FOR DEPARTMENTAL USE ONLY
                                      Filed    APR 8 1997
                                               AVR 8 1997
                                      _________________________________________

38

[logo] Inductry Canada Industrie Canada

Certificate of Amendment Certificat de modification

Canada Business
Corporations Act Loi canadiennes sur les sociétés
par actions

COGNOS INCORPORATED                                                 074301-1
COGNOS INCORPORÉE
______________________________________________    ___________________________________________
Name of corporation-Dénomination de la société    Corporation number-Numéro de la société


I hereby certify that the articles of the         Je certifie que les statuts de la société
above-named corporation were amended:             susmentionnée ont été modifiés:


a) under section 13 of the Canada Business        a) en vertu de l'article 13 de la Loi
Corporations Act in accordance with the      [ ]  canadienne sur les sociétés par actions,
attached notice;                                  conformément à l'avis ci-joint;


b) under section 27 of the Canada Business        b) en vertu de l'article 27 de la Loi canadienne
Corporations Act as set out in the attached  [ ]  sur les sociétés par actions, tel qu'il est
articles of amendment designating a series        indiqué dans les clauses modificatrices
of shares;                                        ci-jointes désignant une série d'actions;


c) under section 179 of the Canada Business       c) en vertu de l'article 179 de la Loi
Corporations Act as set out in the attached  |X|  canadienne sur les sociétés par actions, tel
articles of amendment;                            qu'il est indiqué dans les clauses
                                                  modificatrices ci-jointes;


d) under section 191 of the Canada Business       d) en vertu de l'article 191 de la Loi
Corporations Act as set out in the attached  [ ]  canadienne sur les sociétés par actions,
articles of reorganization;                       tel qu'il est indiqué dans les clauses de
                                                  réorganisation ci-jointes;


                   [signature]


                                               July 29, 2002 / le 29 juillet 2002
               Director - Directeur         Date of Amendment - Date de modification

[LOGO]

39

[LOGO] Industry Canada
Canada Business
Corporations Act
Industrie Canada
Loi canadienne sur les
sociétés par actions
FORM 4
ARTICLES OF AMENDMENT
(SECTION 27 OR 177)
FORMULE 4
CLAUSES MODIFICATRICES
(ARTICLES 27 OU 177)

1 – Name of corporation - Dénomination de la société 2 – Corporation No. — N° de la société

COGNOS INCORPORATED/COGNOS INCORPORÉE 74301-1

3 – The articles of the above-named corporation are amended as follows:                             Les statuts de la société ci-dessus sont modifiés de la façon suivante:

RESOLVED, AS A SPECIAL RESOLUTION, THAT

Paragraph 3 of the Articles of Amendment dated March 17, 1997 be deleted and the following substituted:

“3. to provide that the directors may appoint one or more additional directors, who shall hold office for a term expiring not later that the close of the next annual meeting of shareholders, but the total number of directors so appointed may not exceed one-third of the number of directors elected at the previous annual meeting of shareholders.”

Date                           Signature                   4 - Capacity of - En qualité de
___________________________________________________________________________________________

17/7/02                   [Signature]
___________________________________________________________________________________________

For Departmental Use Only                           Printed Name - Nom en lettres moulées

À l’usage du ministère seulement

Filed
Déposée

[LOGO]

IC3069 (2001/11)

40

EX-10

Exhibit 10.21

COGNOS INCORPORATED
2002-2005 RESTRICTED SHARE UNIT PLAN
(Adopted by the Cognos Board of Directors on September 25, 2002)

1.     PURPOSE

The purpose of this 2002-2005 Restricted Share Unit Plan (the “Plan”) of Cognos Incorporated (the “Corporation”) and any present or future wholly owned subsidiary of the Corporation wherever located (each a “Subsidiary”) is to provide grants (each an “Award”) of Restricted Share Units (as defined below) to officers, directors and employees of the Corporation and its Subsidiaries. Any person to whom an Award has been granted under this plan is called a “Participant”. A “Restricted Share Unit” means a right to receive, on the basis set out in the Plan, one (1) common share in the capital stock of the Corporation (a “Common Share”).

For greater certainty, the Plan together with any trust established pursuant hereto shall be constituted as an “employee benefit plan” for the purposes of the Income Tax Act (Canada) (the “Tax Act”). No provision of the Plan shall be applied, interpreted or administered in a manner contrary to the requirements of the Tax Act for qualification of the Plan as such. For greater certainty, the grant of an Award represents a contingent entitlement of the Participant to whom it has been granted and the exchange of a Restricted Share Unit which is the subject of an Award for a Common Share shall be the payment of such share out of or under an employee benefit plan.

2.     ADMINISTRATION OF THE PLAN

A.     The Plan shall be administered by the Human Resources & Compensation Committee (the “Committee”) of the Board of Directors of the Corporation (the “Board”).

B.     Subject to the terms of the Plan, the Committee shall have the authority to (a) determine the Participants of the Corporation and any Subsidiary (from among the class of individuals eligible under paragraph 1) to whom Awards may be granted; (b) determine the time or times at which Awards may be granted; (c) determine the limitations, restrictions, and conditions of any grant of Awards; (d) determine the time or times when each Restricted Share Unit which is the subject of an Award shall become exchangeable or exercisable for a Common Share and the duration of the exchange or exercise period; (e) interpret the Plan and prescribe and rescind rules and regulations relating to it; and (f) select on or more trustees (each a “Trustee” and collectively the “Trustees”) and establish one or more agreements between the Corporation and each Trustee (each a “Trust Agreement”) to provide for the purchase of Common Shares on the open market for exchange or exercise under the Plan and the administration of the policies and procedures governing such purchases. The interpretation and construction by the Committee of any provisions of the Plan or of any Awards granted under it is final unless otherwise determined by the Board. The Committee may from time to time adopt such rules and regulations for carrying out the Plan as it may consider appropriate. No member of the Board or the Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Award granted under it.

C.     The date of grant of an Award under the Plan will be the date specified by the Committee at the time it grants the Award. If no date is specified, the date will be the date of the grant.

D.     Awards may be granted to members of the Board, including members of the Committee. All grants of Awards to members of the Board shall be made in accordance with the provisions of this Plan applicable to other eligible persons. Members of the Board who either (a) are eligible to receive grants of Awards pursuant to the Plan or (b) have been granted Awards may vote on any matters affecting the administration of the Plan or the grant of any Awards pursuant to the Plan, except that no such member shall act upon the granting to himself of Awards, but any such member may be counted in determining the existence of a quorum at any meeting of the Board during which such action is taken with respect to the granting of Awards to such member.

3.     AWARDS

Subject to the requirements in this Plan, the Committee shall determine the number of Restricted Share Units which are granted pursuant to an Award and the terms and conditions of each Award. After the expiration and/or satisfaction of the applicable restrictions and conditions set forth in an Award Agreement (as defined below), a

41

Participant may elect to exchange each Restricted Share Unit for one (1) Common Share. The delivery to the Participant of such Common Share shall be subject to (i) such trading restrictions as may be imposed by the Corporation from time to time and (ii) the delivery of such evidence as the Corporation’s registrar and transfer agent may reasonably require confirming the eligibility of such Participant to own Common Shares under the ownership constraints applicable to shareholders of the Corporation.

4.     STOCK

A.     All stock delivered to the Participants under the Plan shall be authorized, issued and outstanding Common Shares, which shall be purchased by the Trustees. The aggregate number of Common Shares which may be purchased by the Trustees is 2,000,000, subject to adjustment as provided in paragraph 8 below. The Corporation shall provide the Trustees with the funds necessary to purchase the Common Shares. The obligations of (i) the Trustees regarding the purchase and delivery of Common Shares and (ii) the Corporation regarding the delivery to the Trustees of such funds, shall in each case be more fully set forth in one or more Trust Agreements. All dividends paid on Common Shares which are held by the Trustees shall be retained by the Trustees and shall be distributed to the Participant at the time the Common Shares on which the dividends were declared are distributed to the Participant.

B.     The aggregate number of shares subject to Awards granted in the first three years of the Plan to Participants who are, at the time of grant, directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) of the Corporation shall not exceed 50% of the aggregate number of shares subject to Awards granted to all Participants during such period; and the aggregate number of shares subject to Awards granted in each successive year to Participants who are, at the time of grant, directors or officers of the Corporation shall not exceed 50% of the aggregate number of shares subject to Awards granted to all Participants during such year.

5.     TERM & EFFECTIVE DATE

This Plan was adopted by the Board on September 25, 2002. The Plan shall expire on September 30, 2005 (except as to Awards outstanding on that date).

6.     DURATION OF AWARD

Subject to the terms of the Plan, each Award shall expire on the date specified by the Committee.

7.     TERMS AND CONDITIONS OF AWARDS

A.     The term of each Award shall be set out in an Award agreement (each, an “Award Agreement”) which may contain such restrictions, conditions and other provisions as the Committee deems advisable. The Committee may provide for the acceleration of any restrictions, either in the initial Award agreement or otherwise in writing, upon the satisfaction of Performance Targets to be to be achieved after the date of grant. “Performance Target” means those targets that may be established by the Committee from time to time that relate to corporate, group, unit or individual performance and are established in terms, measures or standards determined by the Committee. Whether any particular Performance Target has been achieved by a Participant in any given period shall be determined in good faith by the Committee in its sole discretion

B.     The Committee may from time to time confer authority and responsibility on one or more of its members or one or more officers of the Corporation to execute and deliver Award agreements. The proper officers of the Corporation are authorized and directed to take any and all action necessary or advisable from time to time to carry out the terms of such Award agreements.

8.     ADJUSTMENTS

Upon the happening of any of the following described events, a Participant’s rights with respect to Restricted Share Units granted hereunder shall be adjusted as follows:

A.     If there is any subdivision or subdivisions of the Common Shares into a greater number of shares at any time, or in the case of the issue of shares of the Corporation to the holders of its outstanding Common Shares by way of stock dividend or stock dividends (other than an issue of shares to shareholders pursuant to their exercise of a right to receive dividends in the form of shares of the Corporation in lieu of cash dividends declared payable in the

42

ordinary course by the Corporation on its Common Shares), the number of Common Shares deliverable upon the exchange or exercise of a Restricted Share Unit shall be increased proportionately.

B.     If there is any consolidation or consolidations of the Common Shares into a lesser number of shares at any time, the number of Common Shares deliverable upon the exchange or exercise of a Restricted Share Unit shall be decreased proportionately.

C.     If there is any reclassification of the Common Shares at any time, a Participant shall accept, at the time of acquisition of shares pursuant to the exchange of a Restricted Share Unit, in lieu of the number of Common Shares in respect of which the Restricted Share Unit is being exchanged, the number of shares of the Corporation of the appropriate class or classes as the Participant would have been entitled as a result of such reclassification or reclassifications had the Restricted Share Unit been exchanged before such reclassification or reclassifications.

D.     If the Corporation is to be amalgamated or consolidated with or acquired by another entity in a merger, sale of all or substantially all of the Corporation’s assets or otherwise, in each case as determined by the Board (an “Acquisition”), the Committee or the board of directors of any entity assuming the obligations of the Corporation under the Plan (the “Successor Board”), shall, as to outstanding Awards, make appropriate provision for the continuation of such Awards by substituting on an equitable basis for the shares then subject to such Awards the consideration payable with respect to the outstanding Common Shares in connection with the Acquisition. In addition to or in lieu of the foregoing, with respect to outstanding Awards, the Committee or Successor Board may, upon written notice to participants: (i) provide that all Awards must be exchanged or exercised, to the extent then exchangeable or exercisable, within a specified number of days of the date of such notice, at the end of which period the Awards and the underlying Restricted Share Units shall terminate; or (ii) terminate all Awards in exchange for a cash payment equal to the fair market value of the shares underlying such Restricted Share Units (to the extent then exchangeable or exercisable) taking into account any exercise price.

E.     If there is any proposed winding up, dissolution or liquidation of the Corporation, each Restricted Share Unit will terminate immediately prior to the consummation of such proposed action or at such other time and subject to such other conditions as shall be determined by the Committee.

F.     Except as expressly provided herein, no issuance by the Corporation of shares of any class, or securities convertible into shares of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the Restricted Share Units. No adjustments to the Restricted Share Units shall be made for dividends paid in cash or in property other than securities of the Corporation.

G.     No fractional shares shall be delivered pursuant to an exchange or exercise under the Plan. A Participant will receive cash in lieu of fractional shares.

9.     REGULATION

A.     Each Restricted Share Unit shall be subject to the requirement that, if at any time the Committee or counsel for the Corporation shall determine, in its reasonable discretion, that the listing, registration or qualification of the Restricted Share Unit or shares thereunder upon any stock exchange, inter-dealer quotation system or under any applicable law, or the consent or approval of any governmental body, is necessary or desirable, as a condition of, or in connection with, the granting of such Restricted Share Unit or the delivery or acquisition of shares thereunder, no such Restricted Share Unit may be exchanged unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee and counsel for the Corporation.

B.     Government regulations may impose reporting or other obligations on the Corporation with respect to the Plan. For example, the Corporation may be required to send tax information statements to employees and former employees that exchange Awards and the Corporation may be required to file tax information returns reporting the income received by Participants in connection with the Plan.

10.     TERM AND AMENDMENT OF THE PLAN

The Board may terminate or amend the Plan in any respect at any time, in accordance with applicable legislation and subject to regulatory approval, if required, except that the approval of shareholders is required if such approval is required by applicable law or the rules or policies of any stock exchange or inter-dealer quotation system on which

43

the Common Shares are then listed. No action of the Committee, Board or shareholders shall adversely affect the rights of a Participant, without the consent of that Participant, under any Award previously granted to the Participant.

11.     WITHHOLDING OF ADDITIONAL INCOME TAXES

Upon the grant of an Award, the vesting or transfer of Restricted Share Units or Common Shares acquired on the exchange or exercise of a Restricted Share Unit, or the making of a distribution or other payment with respect to such Award or Common Shares, the Corporation may withhold taxes required by law. The Committee in its discretion may condition (a) the grant of an Award or exchange or exercise of a Restricted Share Unit or (b) the vesting of an Award or Common Shares acquired by exchanging or exercising a Restricted Share Unit, on the Participant’s making satisfactory arrangement for withholding.

12.     MISCELLANEOUS

A.     Participation in the Plan is voluntary and is not a condition of employment. No employee of the Corporation shall have any claim or right to be granted Awards pursuant to the Plan.

B.     None of the Corporation, any Subsidiary or the Trustees (which for the purposes of this section includes their respective directors, officers and employees) shall have any liability for: (i) the income or other tax consequences to participants arising from participation in the Plan; (ii) any change in the value of the Common Shares; or (iii) any delays or errors in the administration of the Plan, except where such person has acted with willful misconduct. Participants should consult their own tax and business advisors as none of the Corporation, any Subsidiary or the Trustees is providing any such advice to any Participant.

13.     GOVERNING LAW

The validity and construction of the Plan and Award agreements shall be governed by the laws of the Province of Ontario, Canada.

44

EX-99

Exhibit 99

COGNOS INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(US$000s except share amounts, CDN GAAP)
(Unaudited)

	Three months ended November 30,		Nine months ended November 30,
	2002	2001	2002	2001
Revenue
Product license	$ 62,223	$ 59,114	$167,097	$ 152,835
Product support	52,853	44,578	152,269	129,005
Services	22,998	20,489	67,942	66,670
Total revenue	138,074	124,181	387,308	348,510
Operating expenses
Cost of product license	722	847	2,170	2,915
Cost of product support	5,240	3,825	14,682	11,981
Selling, general, and administrative	87,060	86,863	258,281	264,887
Research and development	18,264	17,579	56,991	55,424
Investment tax credits	(2,179)	(1,099)	(4,837)	(3,659)
Special charges	-	-	-	12,798
Total operating expenses	109,107	108,015	327,287	344,346
Operating income	28,967	16,166	60,021	4,164
Interest expense	(211)	(88)	(442)	(257)
Interest income	1,521	1,947	4,741	7,167
Income before taxes	30,277	18,025	64,320	11,074
Income tax provision	11,100	5,957	23,618	5,441
Net income	$19,177	$  12,068	$40,702	$  5,633
Retained earnings at beginning of the period	173,524	160,512	164,144	175,946
Repurchase of shares	(6,234)	(8,955)	(18,379)	(17,954)
Retained earnings at end of the period	$186,467	$163,625	$186,467	$163,625
Net income per share
Basic	$0.22	$0.14	$0.46	$0.06
Diluted	$0.21	$0.13	$0.45	$0.06
Weighted average number of shares (000s)
Basic	87,845	87,488	87,916	87,840
Diluted	89,882	89,456	90,487	89,980

(See accompanying notes)

45

COGNOS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(US$000s, CDN GAAP)

	November 30, 2002	February 28, 2002
Assets	(Unaudited)
Current assets
Cash and cash equivalents	$176,542	$192,900
Short-term investments	161,561	121,629
Accounts receivable	102,397	114,059
Inventories	566	537
Prepaid expenses	6,285	6,765
Income tax assets	5,759	6,404
	453,110	442,294
Fixed assets	58,586	59,008
Goodwill	15,523	15,230
Intangible assets	7,241	14,203
	$534,460	$530,735
Liabilities
Current liabilities
Accounts payable	$ 22,678	$ 26,387
Accrued charges	25,771	34,210
Salaries, commissions, and related items	39,780	37,453
Income taxes payable	2,907	6,167
Deferred revenue	99,607	110,504
	190,743	214,721
Long-term liabilities	3,440	9,131
Deferred income taxes	8,190	6,328
	202,373	230,180
Stockholders' Equity
Capital stock
Common shares      (November 30, 2002 - 87,863,382;                                       February 28, 2002 - 87,997,220)	160,373	151,637
Retained earnings	186,467	164,144
Accumulated other comprehensive items	(14,753)	(15,226)
	332,087	300,555
	$534,460	$530,735

(See accompanying notes)

46

COGNOS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(US$000s, CDN GAAP)
(Unaudited)

	Three months ended November 30,		Nine months ended November 30,
	2002	2001	2002	2001
Cash provided by (used in) operating activities
Net income	$ 19,177	$ 12,068	$ 40,702	$  5,633
Non-cash items
Depreciation and amortization	6,451	9,972	19,850	28,340
Amortization of deferred stock-based compensation	148	504	518	1,658
Amortization of other deferred compensation	119	606	415	1,938
Deferred income taxes	3,961	(1,010)	1,962	(4,232)
Loss on disposal of fixed assets	8	43	109	583
	29,864	22,183	63,556	33,920
Change in non-cash working capital
Decrease (increase) in accounts receivable	(18,157)	(6,116)	15,642	44,870
Decrease (increase) in inventory	203	48	(12)	192
Decrease in prepaid expenses	1,484	366	867	1,911
Decrease (increase) in income tax assets	-	2,768	-	(5,526)
Increase (decrease) in accounts payable	4,259	(1,631)	(4,458)	(3,745)
Increase (decrease) in accrued charges	(355)	3,911	(9,755)	9,899
Increase in salaries, commissions, and related items	3,390	3,410	935	5,944
Increase (decrease) in income taxes payable	125	(144)	(3,074)	(16,747)
Decrease in deferred revenue	(5,484)	(2,123)	(14,903)	(10,693)
	15,329	22,672	48,798	60,025
Cash provided by (used in) investing activities
Maturity of short-term investments	19,851	56,557	190,232	235,743
Purchase of short-term investments	(139,146)	(83,144)	(228,789)	(232,035)
Additions to fixed assets	(3,559)	(2,026)	(11,328)	(10,401)
	(122,854)	(28,613)	(49,885)	(6,693)
Cash provided by (used in) financing activities
Issue of common shares	4,106	1,645	9,831	7,073
Repurchase of shares	(6,850)	(9,994)	(19,992)	(19,992)
Decrease in long-term debt and long-term liabilities	(2,361)	(806)	(5,464)	(645)
	(5,105)	(9,155)	(15,625)	(13,564)
Effect of exchange rate changes on cash	72	(977)	354	(825)
Net increase (decrease) in cash and cash equivalents	(112,558)	(16,073)	(16,358)	38,943
Cash and cash equivalents, beginning of period	289,100	170,309	192,900	115,293
Cash and cash equivalents, end of period	176,542	154,236	176,542	154,236
Short-term investments, end of period	161,561	113,881	161,561	113,881
Cash, cash equivalents, and short-term investments, end of period	$338,103	$268,117	$338,103	$268,117

(See accompanying notes)

47

COGNOS INCORPORATED
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All amounts in U.S. dollars, unless otherwise stated)
(In accordance with CDN GAAP)

1.                  Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared by the Corporation in United States (U.S.) dollars and in accordance with Canadian generally accepted accounting principles (“GAAP”) with respect to the preparation of interim financial information. Accordingly, they do not include all information and footnotes as required in the preparation of annual consolidated financial statements. These unaudited condensed notes to the consolidated financial statements should be read in conjunction with the audited financial statements and notes included in the Annual Information Form for the fiscal year ended February 28, 2002.

The preparation of these unaudited consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and the accompanying notes. In the opinion of Management, these unaudited consolidated financial statements reflect all adjustments (which include only normal, recurring adjustments) necessary to state fairly the results for the periods presented. Actual results could differ from these estimates and the operating results for the interim periods presented are not necessarily indicative of the results expected for the full year.

All information is presented in thousands of U.S. dollars, unless otherwise stated. Consolidated financial statements prepared in accordance with U.S. GAAP, in U.S. dollars, are made available to all shareholders, and filed with various regulatory authorities.

2.                  Revenue Recognition

The Corporation recognizes revenue in accordance with Statement of Position (SOP) 97-2, Software Revenue Recognition, issued by the American Institute of Certified Public Accountants.

Substantially all of the Corporation’s product license revenue is earned from licenses of off-the-shelf software requiring no customization. Revenue from these licenses is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectibility is probable. If a license includes the right to return the product for refund or credit, revenue is recognized net of an allowance for estimated returns provided all the requirements of SOP 97-2 have been met.

Revenue from product support contracts is recognized ratably over the life of the contract. Incremental costs directly attributable to the acquisition of product support contracts, and that would not have been incurred but for the acquisition of that contract, are deferred and expensed in the period the related revenue is recognized. These costs include commissions payable on sales of support contracts.

Revenue from education, consulting, and other services is recognized at the time such services are rendered.

48

COGNOS INCORPORATED
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All amounts in U.S. dollars, unless otherwise stated)
(In accordance with CDN GAAP)

For contracts with multiple obligations (e.g. deliverable and undeliverable products, support obligations, education, consulting and other services), the Corporation allocates revenue to each element of the contract based on objective evidence, specific to the Corporation, of the fair value of the element.

3.                  Goodwill

During the three and nine months ended November 30, 2002 there were additions to goodwill of $115,000 and $293,000 related to additional consideration paid to the former shareholders of Teijin Cognos Incorporated (TCI). This additional consideration was based on components of the net revenue of TCI during the quarter.

Under CICA Handbook Section 3062 Goodwill and Other Intangible Assets (Section 3062) which the Corporation implemented March 1, 2002, goodwill will no longer be amortized but will be subject to an annual impairment test. The Corporation performed the required impairment tests of goodwill as of March 1, 2002. The effect of these tests was not material on the earnings and financial position of the Corporation.

49

COGNOS INCORPORATED
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All amounts in U.S. dollars, unless otherwise stated)
(In accordance with CDN GAAP)

If the non-amortization provision of Section 3062 had been in effect beginning March 1, 2001 the effect would have been as follows (000’s except per share amounts):

	Three months ended November 30,		Nine months ended November 30,
	2002	2001	2002	2001
Reported net income	$19,177	$12,068	$40,702	$5,633
Goodwill amortization	-	1,089	-	3,267
Adjusted net income	$19,177	$13,157	$40,702	$8,900
Basic net income per share:
Reported net income:	$0.22	$0.14	$0.46	$0.06
Goodwill amortization	-	0.01	-	0.04
Adjusted net income	$0.22	$0.15	$0.46	$0.10
Diluted net income per share:
Reported net income:	$0.21	$0.13	$0.45	$0.06
Goodwill amortization	-	0.02	-	0.04
Adjusted net income	$0.21	$0.15	$0.45	$0.10
Weighted average number of shares:
Basic	87,845	87,488	87,916	87,840
Diluted	89,882	89,456	90,487	89,980

4.                  Intangible Assets

	As at November 30, 2002		As at February 28, 2002
	Cost	Accumulated Amortization	Cost	Accumulated Amortization	Amortization Rate
	($000s)		($000s)
Acquired Technology	$ 13,681	$ 10,664	$ 13,681	$  8,720	20%
In-process technology	38,400	34,421	38,400	29,817	20%
Deferred Compensation	8,945	8,700	8,945	8,286	Compensation Period
	61,026	53,785	61,026	46,823
	(53,785)		(46,823)
Net book value	$ 7,241		$ 14,203

50

COGNOS INCORPORATED
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All amounts in U.S. dollars, unless otherwise stated)
(In accordance with CDN GAAP)

Amortization of intangible assets was $1,968,000 and $3,210,000 in the quarters ended November 30, 2002 and November 30, 2001, respectively and was $6,962,000 and $9,752,000 for the nine months ended November 30, 2002 and November 30, 2001, respectively. The estimated amortization expense related to intangible assets is as follows ($000s):

2003 (Q4)	$1,209
2004	4,442
2005	1,007
2006	583

5.                  Income Taxes

The Corporation provides for income taxes in its quarterly unaudited financial statements based on the estimated effective tax rate for the full fiscal year.

6.                  Net Income per Share

The reconciliation of the numerator and denominator for the calculation of basic and diluted net income per share is as follows: (000s except per share amounts)

	Three months ended November 30,		Nine months ended November 30,
	2002	2001	2002	2001
Basic Net Income per Share
Net income	$19,177	$12,068	$40,702	$5,633
Weighted average number of shares outstanding	87,845	87,488	87,916	87,840
Basic net income per share	$0.22	$0.14	$0.46	$0.06
Diluted Net Income per Share
Net income	$19,177	$12,068	$40,702	$5,633
Weighted average number of shares outstanding	87,845	87,488	87,916	87,840
Dilutive effect of stock options	2,037	1,968	2,571	2,140
Adjusted weighted average number of shares outstanding	89,882	89,456	90,487	89,980
Diluted net income per share	$0.21	$0.13	$0.45	$0.06

51

COGNOS INCORPORATED
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All amounts in U.S. dollars, unless otherwise stated)
(In accordance with CDN GAAP)

7.                    Comprehensive Income

Comprehensive income includes net income and other comprehensive income (OCI). OCI refers to changes in net assets from transactions and other events, and circumstances other than transactions with stockholders. These changes are recorded directly as a separate component of Stockholders’ Equity and excluded from net income. The only other comprehensive income item for the Corporation relates to foreign currency translation adjustments pertaining to those subsidiaries not using the U.S. dollar as their functional currency net of derivative gains or losses.

The components of comprehensive income were as follows ($000’s):

	Three months ended November 30,		Nine months ended November 30,
	2002	2001	2002	2001
Net income	$19,177	$12,068	$40,702	$5,633
Other comprehensive income (expense):
Foreign currency translation adjustments	(286)	(1,555)	473	(3,431)
Comprehensive income	$18,891	$10,513	$41,175	$2,202

8.                       Accounting for Stock Option Plans

As permitted by CICA Handbook Section 3870 Stock-Based Compensation and Other Stock-Based Payments (Section 3870), the Corporation did not adopt the fair value based method of accounting for all employee stock-based compensation. The exercise price of all stock options is equal to the market price of the stock on the trading day preceding the date of grant. Accordingly, no compensation cost has been recognized in the financial statements for the Corporation’s stock option and stock purchase plans.

52

COGNOS INCORPORATED
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All amounts in U.S. dollars, unless otherwise stated)
(In accordance with CDN GAAP)

Section 3870 requires disclosure of pro forma net income and earnings per share as if the Corporation had elected to adopt the fair value based accounting method. If the fair values of the options granted had been recognized as compensation expense on a straight line basis over the vesting period of the grant, stock-based compensation costs would have reduced net income, basic net income per share and diluted income per share as indicated in the table below ($000’s):

	Three months ended November 30,		Nine months ended November 30,
	2002	2001	2002	2001
Net income (loss):
As reported	$19,177	$12,068	$40,702	$  5,633
Proforma	$11,528	$ 5,411	$19,680	$(13,702)
Basic net income (loss) per share:
As reported	$0.22	$0.14	$0.46	$0.06
Proforma	$0.13	$0.06	$0.22	$(0.16)
Diluted net income (loss) per share:
As reported	$0.21	$0.13	$0.45	$0.06
Proforma	$0.13	$0.06	$0.22	$(0.15)

The fair value of the options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions:

	Three months ended November 30,		Nine months ended November 30,
	2002	2001	2002	2001
Risk-free interest rates	N/A*	3.1%	3.7%	4.2%
Expected life of options	N/A*	2.8 years	2.9 years	2.9 years
Expected volatility	N/A*	68.5%	67.9%	68.5%
Dividend yield	N/A*	0.0%	0.0%	0.0%

* During the three months ended November 30, 2002 no options were granted.

9.                       Segmented Information

The Corporation has one reportable segment—computer software products.

53

COGNOS INCORPORATED
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(All amounts in U.S. dollars, unless otherwise stated)
(In accordance with CDN GAAP)

10.                       Secondary Offering

On July 16, 2002, the Corporation filed a final registration statement with the United States Securities and Exchange Commission and a Canadian prospectus with Canadian securities regulators for a secondary offering of 3,600,000 common shares at a price to the public of $17.50 per share. All of the common shares in the offering were sold by certain entities affiliated with Michael U. Potter. The Corporation did not receive any proceeds from the sale of the shares. The Corporation incurred costs related to the filing of this secondary offering and those costs were expensed during the quarter ended August 31, 2002. Under this secondary offering the Corporation repurchased 180,000 of its own shares at an aggregate purchase price of $3,150,000.

11.                       Subsequent Event

On January 10, 2003, subsequent to the quarter ended November 30, 2002, the Corporation completed the acquisition of privately-held Adaytum, Inc. (“Adaytum”), based in Minneapolis, Minnesota. Adaytum is a leading global provider of enterprise performance planning software. The Corporation entered into an Agreement and Plan of Reorganisation dated December 19, 2002 (the “Merger Agreement”). The total merger consideration is approximately $157 million, after adjustments provided for in the Merger Agreement. In addition, the Corporation assumed certain stock options that were outstanding under Adaytum’s stock option plan.

54

EX-99

Exhibit 99.1

COGNOS INCORPORATED

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS-CANADIAN SUPPLEMENT
(in United States dollars, unless otherwise indicated, and in accordance with CDN GAAP)

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations-Canadian Supplement (“Canadian Supplement”) should be read in conjunction with our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) included in Item 2 of this quarterly report. The Canadian Supplement should also be read in conjunction with the unaudited Consolidated Financial Statements and Notes prepared in accordance with U.S. GAAP (included in Item 1), the unaudited Consolidated Financial Statements and Notes prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) (included as exhibit 99) and the audited Consolidated Financial Statements and Notes included in our Annual Information Form for the fiscal year ended February 28, 2002.

The following contains forward-looking statements and should be read in conjunction with the factors set forth in the “Certain Factors That May Affect Future Results” section of the MD&A in Item 2 of this quarterly report. All dollar amounts in this Canadian Supplement are in thousands of United States dollars unless otherwise stated. The Canadian Supplement has been prepared by management to provide an analysis of the material differences between Canadian GAAP and U.S. GAAP on our financial condition and results of operations.

RESULTS OF OPERATIONS

	Three months ended November 30,		Nine months ended November 30,
	2002	2001	2002	2001
Income before taxes – U.S. GAAP	$29,308	$18,846	$64,087	$13,175
Income before taxes – Canadian GAAP	$30,277	$18,025	$64,320	$11,074
Income tax provision – U.S. GAAP	$9,379	$5,560	$20,508	$3,887
Income tax provision – Canadian GAAP	$11,100	$5,957	$23,618	$5,441
Net income per share diluted – U.S. GAAP	$0.22	$0.15	$0.48	$0.10
Net income per share diluted – Canadian GAAP	$0.21	$0.13	$0.45	$0.06

55

Exhibit 99.1

COGNOS INCORPORATED

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS-CANADIAN SUPPLEMENT
(in United States dollars, unless otherwise indicated, and in accordance with CDN GAAP)

Acquired in-process technology

Canadian GAAP requires capitalization of the value assigned to acquired in-process technology and amortization of this value over its estimated useful life. Under U.S. GAAP, this value is written off immediately. The impact of this difference was to decrease income before taxes by $1.2 million and $1.9 million for the three months ended November 30, 2002 and November 30, 2001, respectively, compared to U.S. GAAP. For the nine-month periods ended November 30, 2002 and November 30, 2001 the impact of this difference was to decrease income before taxes by $4.6 million and $5.8 million, respectively, as compared to U.S. GAAP.

Investment tax credits

Canadian GAAP requires that investment tax credits be deducted from operating expense. Under U.S. GAAP, these amounts are deducted from the income tax provision. The impact of this difference was to increase income before taxes and the income tax provision by $2.2 million for the three months ended November 30, 2002, and $1.1 million for the three months ended November 30, 2001, compared to U.S. GAAP. For the nine-month periods ended November 30, 2002 and November 30, 2001 the impact of this difference was to increase income before taxes and the income tax provision by $4.8 million and $3.7 million, respectively, compared to U.S. GAAP.

Deferred income taxes related to acquired in-process technology

The above noted difference related to the capitalization of in-process technology created an additional deferred income tax liability on the Canadian GAAP balance sheet as the capitalization of the in-process technology created a temporary difference. The amortization of this balance decreased the Canadian GAAP income tax provision by $0.5 million and $0.7 million for the quarters ended November 30, 2002 and November 30, 2001, respectively as compared to U.S. GAAP. For the nine-month periods ended November 30, 2002 and November 30, 2001 the amortization of this balance decreased the Canadian GAAP income tax provision by $1.7 million and $2.1 million respectively, as compared to U.S. GAAP.

56

EX-99

Exhibit 99.2

COGNOS INCORPORATED

CERTIFICATION PURSUANT TO 18 U.S.C SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Cognos Incorporated (the “Company”) on Form 10-Q for the period ended November 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Renato Zambonini, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

    (1)        The Report fully complies with the requirements of section 13(a) or15(d) of the Securities Exchange Act of 1934, as amended; and

    (2)        The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

January 13, 2003	/s/ Renato Zambonini
Date	Renato Zambonini, Chief Executive Officer

57

EX-99

Exhibit 99.3

COGNOS INCORPORATED

CERTIFICATION PURSUANT TO 18 U.S.C SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Cognos Incorporated (the “Company”) on Form 10-Q for the period ended November 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Tom Manley, Senior Vice President Finance & Administration and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

    (1)        The Report fully complies with the requirements of section 13(a) or15(d) of the Securities Exchange Act of 1934, as amended; and

    (2)        The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

January 13, 2003	/s/ Tom Manley
Date	Tom Manley Senior Vice President, Finance & Administration and Chief Financial Officer (Principal Financial Officer and Chief Accounting Officer)

58